the military, veterans and their families is without equal. begin your legacy, get an auto insurance quote. usaa. we know what it means to serve. still no deal out of washington. the talks apparently continue. we'll see what happens. stock market lower, but have a good weekend in the meantime. that does it for closing bell. >> indeed it does. we're watching sunday night at 6:30 p.m. when the house reconvenes. options action is starting right now. >> you're looking at a live shot

of the white house where leaders just emerged from a bheeth with president obama. washington agains to be the only story on wall street. lows of the day now on a five-day losing streak. futures indicate more pain. eamon javers has the latest. >> we saw them trooping in and out. now we're starting to get some indications of what happened in the meeting. i'm told by nancy pelosi's office that she's saying senators reed and mcconnell will try to come up with something. they also said that speaker boehner said in the meeting that he won't move anything until the senate moves first. and nancy pelosi called the meeting constructive and candid. that's the first indication we have on the record from one of the leaders about what happened in that meeting. all eyes are on the 6:30 p.m.

house reconveninreconvening. what if anything will they be able to vote on? we don't know the answer as of now. we do know the president did not make any new offers in the meeting today. >> it is staggering for the president to call the congressional leaders in at 3:00 on a friday and tell them to come up with a plan, when that could have been the case this morning. to give them time to come up with a plan. >> you're right, i think based on what we know now publicly it would appear that the white house sort of let the expectations game get ahead of them here. because there was talk in washington early on in the day that there might be a mini deal pending. maybe an offer from the president. none of those peer to have been true. we're told the president went into the meeting with a plan of simply restating what he said last friday, that he was willing

to extend the bush tax cuts for those making under $250,000. of course that was not a proposal that republicans were likely to greet with open arms, to say the least. >> any sense on how senators mcconnell and senator reed will actually stage some sort of meeting of the minds, especially as senator mcconnell is up for re-election in 2014. nobody wants to be perceived as the one who's going to roll over. >> we don't know, but there's intense interest on in capitol hill on this. a picture of the senate floor was tweeted when mcconnell got up up from the meeting at the white house and he's surrounded in the picture by his republican colleagues. so the republican senators themselves would like to know from their leader, you know, what happened there, what are we going to do now? that's the big, open question now. >> the dow jones is reporting that a white house official is saying the white house will host a conference call with ceos at 5:30 p.m. eastern time, just

about 30 minutes from now. any sense as to why that would happen and what the message might be? >> yes, we reported that earlier today and we reported the president will not be on that phone call. it will be white house senior staff with ceos of major corporations and they'll get briefed of what happened in the fiscal cliff negotiations. but the white house clearly wants to have the business community in this country on their side politically. they view them as a potential ally in this putting pressure on capitol hill, republicans in particular, to move something over the weekend. but we're running out of time here. if they're back in town at 6:30 on monday -- on sunday, rather, that gives them sunday night and monday to try to pass something, not a lot of time in washington terms. >> okay, eamon javers, thanks so much for keeping us updated. let's bring in the rest of the options action crew and talk about the markets. mike not very good action today. closing at session lows and

futures look to be rough on monday as well. >> yeah, it's interesting, when they filed out of the white house, this was post close, if you're looking at the mini futures, they dropped by about ten handles off that. a lot of disappointment among the futures markets at what isn't going on there. i think there's good reason for that, but it's hard to imagine what could have emerged from this that would have been so much to feel good about. because really with the amount of time they have remaining, whatever solution we're likely to get is only going to be patchwork at best and it's hard to imagine the equity markets will rally strongly off of some half hearted solution. >> it might not have rallied, but we night not see a ten-handle drop in the s&p minis. we should give you context, the volumes are very light, but if we had the catch pork, we could have seen stability in the

markets. >> that's right. we wouldn't have seen it drop 15 handles. we like to talk about the fix, it's a measure, how expensive, options on the sep s&p are. the bix was up a ton today. we wouldn't have seen the bix spike about 10% today. it seems like the last seven days have been wasted because we haven't made any progress from last friday to this friday. we've said many times on the network that elections have consequences. and the president won re-election, but at some point, i think we're going to have to meet in the middle. is that closer to what mr. obama wants, or closer tort republicans? that may be the question. but he was re-elected president, not king and he has to give a little bit. >> brian, i want to go to you.

we can't talk about the futures without talking to you. talk to us about the usual spike ahead of a weekend and ahead of a week where we do see one trading day off. >> yeah, a lot of nervousness in the market. absolutely into the close. especially vix futures. really spiking hard in the last 15 minutes of trading here. a lot of bearish bets put on the spiders. whether it was a bear bet outright or protecting their portfolio. a lot of stops getting kicked in. 1390 in the emini future was a critical level. stops kicked in, set the market lower here, i think what came out of the meeting is nothing unexpected. we didn't expect them to have a deal here today and we didn't get one. so this is not unusual. certainly setting up some negativity in the market here.

to mike's point, i don't see what gets cut here that makes the market go significantly higher. use caution here in the market. scott mentioned the price of options are more expensive now, yes, 16% rise in the vix. you have to be careful outright running out and buying. it's almost better to take some off the table, go to cash, come mnld, wait to see how things simmer out. a lot of volatility in the market now, hard to be an investor. >> the question, why can't washington get a deal done? ed rendell, arthur of a nation's wusss. governor, it's fantastic to have you on the program. >> i'm also the co-chair of the campaign to fix the debt. from our perspective, this is a disaster. because even if there is a deal, technically avoids going over the fiscal cliff, stops all the other stuff from happening.

it's a disaster because we had seven weeks to do a big deal, which would have reassured the markets, the world, that we could function as a government and make important compromises that we could take shared pain as well as shared sacrifices and all we've done even if we get out of this by december 31, we kicked the can down the road to another day where we'll have to face the harsh realities that you can't always get what you want. we democrats are going to have to accept significant entitlement reform, some of which is needed to preserve the programs we hold dear. republicans are going to have to accept 1$1.2 or three trillion n new revenue. the numbers have to add up, so we can get down to a reasonable percentage of gross national product. >> governor, when you watch these politicians on both sides of the aisle for that matter, take to the cent floor, point

fingers, then we have this meeting where nothing has been done, how frustrating is this and is it a symptom of the gridlock that we have in d.c. right now that we can't get a deal done as we teeter on the cliff? >> it is. and it's amazing to me. because if you looked at the exit polls from the election, 70%-plus of the american people, regardless of who they voted for, said they wanted compromise and wanted a deal to get done. yes, there are 15% on each side that say, how dare you do this, we're going to get you. but our country is at a cross roads. if there ever was a time for somebody to risk doing something difficult to take a stand that's worth possibly losing for, this is it. if we reach a deal on the debt that's significant, the economy takes off, we have a climate to deal with immigration, deal with guns, deal with energy, deal

with infrastructure, deal with education and get the nation back on track. but we're blowing this because everyone is sticking to their idealogical outposts and no one's willing to come in. by the way, the american people are smarter than our politicians give them credit for. we know there's going to have to be pain. we know there's going to have to be shared suffice. defense gets cut, revenue gets raised. it's the only way to make the numbers add up. >> what a lot of traders are saying, it was the first session of this five-day losing streak that we've been in, is that perhaps the markets really need to sell off. perhaps there neez to be a whoosh to the down side for washington to see how important it is to get a deal done. do you agree there needs to be something like that, a real point of pain for d.c. to get going? >> sure. i think that's right. i think there isn't a feeling

that it's a real crisis. you hear the talk, well, if we go over the cliff, we can remedy it, we can do something two months later and make it retroactive. we need a signal from the market, but also need the ceos who have stepped forward and fundamentaled the campaign to deliver a message to both sides, because they do contribute to both sides, that if you don't get serious and solve this, lose our numbers. >> governor, it's interesting, coming from one of the ten largest states in terms of federal tax revenue. i'm curious what you think the implications are going to be for state finances as they try to accomplish what they've been doing with a cut back in revenues coming back to them from washington? what would be the implications for the state of pennsylvania, for example? >> it would be short-term pain. but again, if this causes the economy to take off like i think it will and like people a lot smarter than me -- brian sullivan, i didn't understand a word he said, he's a lot smarter

than i am. he believes a good deal will cause the economy to take off. if it happens, we'll get so much increased revenue coming in, that will make up for the cuts in what the federal government givers us. >> governor, how do you think this ends up playing out over the next few days? do you think we'll end up with a deal by december -- or midnight on december 31st? and if you're going to go that far, tell us what kind of deal do you think it would be? a skinny deal, a really skinny deal, or a more comprehensive deal. >> first of all, it's clear from what came out of the meeting, the senate will have to reach an agreement and pass a bill that the house can deal with, starting sunday night. the senate's got to go to work, probably obviously tomorrow and sunday and put something together, a compromise that suits them and suits the president. they have to send it over to the house. the reason it's important, house

republicans then have a little bit of cover. because their senators or a significant number of them, have voted for the compromise. it makes it a little easier for them. but guys, be down cast because it will be a really skinny deal that won't mean much. we'll have just kicked the can down the road again as we've done so many times. >> if we don't get serious, i think we're going to hell in a hand basket. >> governor, rendell, thanks for your time. lieutenant governor of pennsylvania. hell in a hand basket, not so great and certainly not a great indications as to where the markets might go on monday. brian sut land, in terms of defense stocks, that's one area we're watching, but all the areas that have led us higher in the charge in the s&p. i'm talking footage, home builders, as well as defense

stocks. >> even small caps have done okay. the republicans talk about small caps and businesses mealing some pain on this deal. that's interesting to me. maybe these guys, people investing in these names, feel like there is a deal that can be reached. does it happen january 1st? i'm not sure that will happen. certainly we're getting close to that point. maybe we can put some stop gaps in, the small cap, the business owners can come together and at least be okay. we have been seeing improvement in the unemployment picture and the durable goods orders that are think haing in there. at least on a global economic point, it looks okay. i'm not as bearish as the governor, even if it's a patchwork deal. if we kick the can down the road, it's not the best solution, but some stocks are well poised to move higher as long as you're protecting and still play the market.

>> if we don't get a deal, monday the sectors that will feel the most pain, as we've seen in the five-day losing streak. >> home builders will feel pressure because they're stretched on valuation anyway. the defense stocks, we're seeing pressure on the defense stocks regardless of sequestration or not. because we have troop withdrawals from the middle east. those things will continue to pressure defense. any plan will have to involve some defense cuts. that will see pressure as well. we're concerned about the broad economic story industrials, materials, that's where i'm concerned. >> here's the time line, 5:30 p.m., the white house is going to have a conference call with ceos. at 5:45 p.m., president obama will make a statement. meantime we're asking will all of this hurt the united states credit rating? we'll have shawn eekin when we come right back. stay tuned.

[ indistinct shouting ] ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪

[ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade. >> welcome back. president obama scheduled to make a statement from the white house at 5:45 p.m. on the fiscal cliff negotiations. let's it go to amon for the latest on this. >> i think we can expect a fairly short statement from the president. i would be shocked if he took questions from the respiratories that will pack the room in just a couple minutes to hear what he

has to say. senator harry reid came out and spoke to reporters on capitol hill telling them that the next 24 hours here are going to be crucial. that would imply to me that there's something in the mix on the senate side on the fiscal cliff negotiations. what that is, we'll have to find out from the president perhaps at 5:45. >> okay, we'll go back to you for that. thanks so much for keeping us updated. the question at this point is, what impact could going over the cliff have on the u.s.'s credit rating. let's bring in sean egan from egan-jones, he's on the phone tonight. if we go over the cliff, i'm assuming the credit rating agencies, other than yours, the others ones, there's a certain amount of time during which they can review the ratings and then decide. it's not an automatic thing. >> that is correct. the first step is to put it under review. then there will be an assessment of how badly we go over the cliff and also whether there

will be any reform on titlements. the deficit has been improving. the federal deficit has improved over the last couple quarters. >> so is it the case that perhaps because the economy has done better that perhaps that would save us from a credit rating downgrade even if we go over the cliff? >> i don't expect another downgrade from the other rating firms. the next step would be putting it on negative watch. all three major credit rating firms have a negative outlook. the next step is a negative watch and then a downgrade. we don't expect that to happen. especially if the debt ceiling is raised, which is likely, not many people have been speaking about it, but that's likely to come out over the next couple of weeks. then there's the entitlement reform, which probably is more importantly actually than the deficit talks. >> so in terms of entitlement reform, if we have a mini deal, so to speak, where certain tax rates are maintained for the middle class, let's say, but the

amount of time in which entitlement reform can be worked out is an extended time frame that could actually work against the credit rating agencies in terms of downgrades? >> they probably won't. it would be a huge positive in the sense that the credit quality of the u.s. would be improved. bear in mind that the u.s. being the reserve currency has a lot more room in it than other countries. that's why a simple comparison isn't an accurate comparison. >> mike, you have a question. >> i'm curious here, because obviously this whole fiasco is a result of trying to resolve a crisis of ever exploding national debt. my question would be, what do you think the best circumstance would be as far as the u.s. credit rating is concerned, coming out of this, given the short amount of time they have to come up with something? >> i wouldn't see it as a fee

asko. this is politics at itself best. it takes time and effort and there's a lot of friction involved. i think this is the normal process being worked out. i think what would give a lot of comfort to people in my position is whether or not the unfunded pension -- the unfunded liabilities are reduced and are likely to be reduced over time. >> sean, great to speak with you. >> thank you. >> we're now joined by carter here at the "options action" desk. always good to see. we're looking at a close of 1402. what are some of the levels that we need to defend in order to maintain the markets' run this year. >> i think we might be past that. meaning it's not about defending. this is a very bad tape. the month of december is up 70% of the time going back to the 1890s. we're down in the month almost 1%. it's the worst quarter of all 24

developed indices around the world. the tape itself, leading things like apple, like gold, the treasury bonds couldn't rally with this kind of down take. the yen acting continually very poorly. little potential for upside even with some thin deal, fat deal, epic deal. but downside potential is very real. >> you're talking about all this in the words of governor rendell ring in my mind, hell in a hand basket. what you're saying here is u.s. stocks look to be heading lower and there's no flight to safety at this point. >> that's right. treasures couldn't rally. gold was down. that's ominous. and there are no quens in washington. in the public sector, there are consequences when you pull a stunt like this. in washington, it's just, hey, whatever. >> you're looking at a live shot of where the president will be

speaking in know just about an hour. we'll have live coverage right after this. ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪

[ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade. >> this is a live shot at the white house where congressional

leaders met with the president about an hour ago. let's head down to d.c. for the latest on the story. the bottom line here eamon is that we do not have a deal. >> they came in, they -- [ indistinct shouting ] ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪